Classification of Terms

Conditions

• Major term of the contract which goes to the root of the contract
• If breach will result in termination of the contract
• Innocent party will be able to sue for damages
• Poussard v Spiers, opera singer missing the opening night of the performance was held to be a breach of condition

Warranties

• Minor term of the contract, does not go to the root of the contract
• A breach of warranty will not result in termination of the contract
• Innocent party can sue for damages
• Bettini v Gye, opera singer missing rehearsals was not serious enough to constitute a breach of condition, innocent party could only sue for damages

Innominate Term

• An approach used by the courts where classification of a term as a condition or a warranty is impossible
• Introduced in Hong Kong Fir Shipping v Kawasaki
• There has been
• concern that the use of innominate terms has created too much litigation as per Bunge Corporation v Tradax
• There is
• evidence to suggest that the use of innominate terms can also create
• uncertainty, illustrated in The Mihalilis Angelos where the court held ready to load clause must always be conditions for commercial certainty in maritime contracts
• However, in The Hansa Nord, the courts were able to use this approach prevent the claimant exploiting the defendant, so it will allow judicial flexibility